Roundup: 2nd, 3rd, 5th and 11th Circuits

Continuing a trend of anti-class action rulings from courts across the country, the 2nd Circuit decertified a class of plaintiffs pursuing a copyright infringement case against Google Inc.

The case centers on the tech company’s Google Books Library Project, in which Google scans and digitizes books, then allows users to search for snippets of text from the works. The Authors Guild and several individual writers sued Google for infringement in 2005 and won certification from a district court.

But the 2nd Circuit overturned that decision on July 1, ruling that the lower court should have considered the merits of Google’s fair use defense before deciding whether to certify the class. The success or failure of the fair use argument “will necessarily inform and perhaps [moot] the analysis of many class certification issues,” the appeals court wrote.

The court also signaled its agreement with Google’s argument that the named plaintiffs did not represent the proposed class because many of them benefit from the Google Books project.

3rd Circuit

Delaware, New Jersey, Pennsylvania

For-profit corporations do not have religious rights

In a ruling that sets up a potentially significant circuit split, the 3rd Circuit ruled 2-1 in Conestoga Wood Specialties Corp. v. Secretary of the Department of Health and Human Services that private, for-profit corporations do not have religious rights.

The case was just one of several ongoing lawsuits filed by business owners in response to the Affordable Care Act’s insurance mandate, which requires employers to provide coverage for various contraceptives. In this instance, Conestoga’s Mennonite owners sued the federal government, arguing that the mandate violates their religious beliefs.

The 3rd Circuit, however, held that “the law has long recognized the distinction between the owners of a corporation and the corporation itself.”

Not all courts feel the same, however. In June, the 10th Circuit ruled in a similar case that for-profit companies do indeed have religious freedoms, drawing a parallel to the Supreme Court’s Citizens United decision, which gave companies the right to political expression.

5th Circuit

Louisiana, Mississippi, Texas

Dodd-Frank whistleblowers must report to SEC

In the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act, many companies emphasized internal reporting procedures in an effort to prevent employees from whistleblowing to the government. But on July 17 the 5th Circuit ruled in Asadi v. G.E. Energy that Dodd-Frank doesn’t protect workers from retaliation if they only make reports internally.

Asadi was a GE Energy employee who was fired after internally reporting alleged violations of the Foreign Corrupt Practices Act. But according to the 5th Circuit, Asadi was not a whistleblower because he had not gone to the Securities and Exchange Commission (SEC) with his claims. Section 922 of Dodd-Frank defines a whistleblower as anyone who gives “information relating to a violation of the securities laws to the Commission.”

11th Circuit

Alabama, Florida, Georgia

Lawyerless FLSA settlement not valid

Companies hoping to settle employee lawsuits without attorney involvement should be aware that such deals may not win court approval, following the 11th Circuit’s July 29 ruling in Nall v. Mal-Motels, Inc.

Former Mal-Motels employee Candace Nall sued her boss, Mohammad Malik, for allegedly failing to pay her overtime as required by the Fair Labor Standards Act. The two sides eventually worked out a deal under which Nall agreed to drop her suit in exchange for $2,000.

Although the deal was hammered out with no input from lawyers, Malik hired an attorney to enforce the settlement. Nall’s attorney subsequently objected to the settlement, which did not provide for plaintiffs’ attorney fees.

A district court upheld the validity of what it called a “fair and reasonable” deal. But the 11th Circuit vacated that decision on appeal, ruling that back wage FLSA claims can be settled only by the Department of Labor or by a court-approved “stipulated judgment”—not by two independent parties.